How A Health Insurer's Overpayment Can Become Your Problem

If your health insurer pays too much for a claim, you might think that would be a good kind of problem. But it could turn out to be more of a headache than a windfall.

Just ask Lisa Dowden, who had gastric bypass surgery three years ago. In September, the 51-year-old lawyer got a bill from her insurer claiming she owed more than $9,100 because it had overpaid for the services of the surgeon who assisted on her operation.

Dowden is in this predicament because she went to someone outsider the usual network for her surgery. The insurer sent payments directly to her, a common practice in cases where the insurer doesn't have a contract with a doctor or hospital. Dowden signed the checks over to the surgeon without cashing them.

But the health plan says in those circumstances it's obligated to try to recover the overpayment from a plan member rather than a provider because the plan member is the one who received the checks and in the end is responsible for the provider charges.

Dowden is challenging the bill. "How am I supposed to know if they overpaid?" she asks. "None of this was in my control."

An overpayment can happen for many reasons, from coding errors to instance when a patient receives a service that's not covered under the plan.

As for doctors, they come in for their share of overpayment trouble too, although the situation may be improving. In 2011, nearly 20 percent of paid medical claims from private health insurers had errors, according to the American Medical Association.

Insurers work hard to get it right, says Susan Pisano, a spokeswoman for America's Health Insurance Plans, a trade group. "There are hundreds of millions of claims filed each year, and health plans have gotten quite good at developing systems that flag things that need attention," she says. "They've also gotten quite good at automating transactions."

Working with insurers, the AMA says it reduced the error rate to 9.5 percent in 2012, saving the health care system $8 billion in unnecessary administrative work.